August 22, 2022

Director Chopra Discusses Digital Marketing at National Association of Attorneys General Presidential Summit

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Key Takeaways

  • He noted that “more and more Americans are experiencing the feeling of being digitally stalked by specific ad content.”
  • The Consumer Financial Protection Act, he said, “explicitly authorizes states to bring law enforcement actions against covered financial firms and limits the ability for federal preemption abuses to recur.”

On August 10, 2022, Director Rohit Chopra delivered remarks at the 2022 National Association of Attorneys General Presidential Summit in Des Moines, Iowa on the topic of consumer protection in the digital world.  Director Chopra focused his remarks on the current state of digital marketing and advertising in an ever-increasing digitalized world.

Director Chopra began his remarks by discussing the shift in advertising by companies from the traditional methods of purchasing time or space in newspapers and on radio or television to the more targeted manner of digital advertising.  With this digital advertising, digital sales force teams "armed with personalized and detailed dossiers on each consumer" deliver advertisements personalized to the consumer based upon a "psychographic profile developed on each individual user through surveillance across devices and services accessed across the digital world."  As companies seek to earn money by not only broadcasting the advertising but also by convincing the consumer to click on the advertising, they have become more persistent in using technology to "follow" consumers across the digital world.  As a result, Director Chopra noted, "more and more Americans are experiencing the feeling of being digitally stalked by specific ad content." 

Director Chopra highlighted the effect of this personalized digital marketing by addressing former Secretary of Housing and Urban Development Ben Carson's charges against Facebook for allegedly violating the Fair Housing Act.  Secretary Carson had charged Facebook with helping advertisers limit the audience for its advertisements and enabling advertisers to target specific groups of people to the exclusion of protected classes.  Secretary Carson alleged Facebook had developed a system that purposefully excluded certain individuals from viewing the same advertisement because the digital profile of the consumer did not match the "composite consumer" determined by Facebook to most likely engage with the ad.  As noted by Director Chopra, "Facebook's ad delivery system prevented advertisers who wanted to reach a broad audience of users from doing so."  Even if an advertiser tried to target an audience that broadly spanned protected class groups, Facebook's ad delivery system forbid it from doing so.

In speaking to the Attorneys General, Director Chopra reminded them of the role of states to police illegal conduct in consumer financial services and that the Consumer Financial Protection Act "explicitly authorizes states to bring law enforcement actions against covered financial firms and limits the ability for federal preemption abuses to recur."  Noting that the Act exempts some service providers that play absolutely no material role in the offering of a financial product or service, such as service providers that provide ministerial services or who solely provide time or space for an advertisement, other service providers are commingling many other features that go well beyond the exemption.  To address this issue, the CFPB has issued an interpretive rule explaining that the service provider exemption for "time or space" will typically not apply to the digital marketing services offered by major platforms, which will make the service providers liable for violations of the Act.  He noted that the Act can be enforced by state attorneys general.

Concluding his remarks, Director Chopra stated that advances in technology "should help our economy and society advance, rather than incentivizing a rush to seize our sensitive financial data and to allow tech giants to evade existing laws that other firms must comply with."  Spotlighting the latest initiatives taken by the CFPB to prepare for the future of consumer finance as well as noting future plans, Director Chopra ended his remarks by saying, "As you exercise or look to exercise your authorities under the Act, the CFPB will continue to be a partner in rooting out lawbreakers and keeping markets fair for consumers and honest businesses."


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